Exhibit 99.3
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DESERT SPRINGS MARRIOTT
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LIMITED PARTNERSHIP
1998 Third Quarter Report
Limited Partner Quarterly Update
Presented for your review is the 1998 Third Quarter Report for Desert Springs
Marriott Limited Partnership (the "Partnership"). A discussion of the
Partnership's performance and hotel operations is included in the attached Form
10-Q, Item 2, Management's Discussion and Analysis of Financial Condition and
Results of Operations. You are encouraged to read this report in its entirety.
If you have any further questions regarding your investment, please contact Host
Marriott Partnership Investor Relations at (301) 380-2070.
Host Marriott Corporation's Conversion to a Real Estate Investment Trust
As publicly announced in April 1998, Host Marriott Corporation ("Host
Marriott"), the parent company of the General Partner of the Partnership, has
adopted a plan to restructure its business operations so that it will qualify as
a real estate investment trust ("REIT") for federal income tax purposes. As part
of the REIT conversion, Host Marriott proposes to merge into HMC Merger
Corporation (to be renamed "Host Marriott Corporation"), a Maryland corporation
("Host REIT"), and thereafter continue and expand its full-service hotel
ownership business. Host REIT will operate through Host Marriott, L.P., a
Delaware limited partnership (the "Operating Partnership"), of which Host REIT
will be the sole general partner. This is commonly called an "UPREIT" structure
and it is used to facilitate tax-deferred acquisitions of properties.
In previous correspondence, you were notified that you would be asked to vote on
a proposed transaction involving the Merger of this Partnership with a
subsidiary of the Operating Partnership. The Prospectus/Consent Solicitation
Statement and the Partnership's Supplement which contain detailed information
relating to this proposal were mailed to all Limited Partners of record as of
September 18, 1998. This is the date set by the General Partner as the record
date for determining Limited Partners entitled to vote on the Merger and the
related amendments to the partnership agreement. The Prospectus/Consent
Solicitation Statement and the Partnership's Supplement should be reviewed as
you make your decision to vote. You also received, among other things, a list of
Questions and Answers and telephone numbers for assistance. We strongly
encourage Limited Partners to consult with their own financial and tax advisors
when making their decision on how to vote and which option to choose.
It is important that your Partnership Units be voted, regardless of the number
of Partnership Units you hold. The solicitation period ends at 5:00 p.m.,
Eastern time, on December 12, 1998, unless extended. If you have not yet
received the Prospectus/Consent Solicitation Statement or if you or your
advisors have any questions regarding the Merger, please contact the Information
Agent at 1-800-733-8481 extension 445.
Partnership Cash Distributions
As you are aware, the Partnership made a distribution in May 1998 in the amount
of $2,500 per limited partner unit. This amount represents funds from 1997
operations. It is our expectation that distributions from 1998 will be
approximately $1,500 per limited partner unit. However, actual distributions may
be higher or lower depending on actual Hotel operating results for the remainder
of the year. Pursuant to the terms of the new financing agreement, any
distribution from 1998 operations will be made at approximately the same time in
1999 that it was distributed this year.
Estimated 1998 Tax Information
If the Partnership votes to approve the Merger and the Merger is consummated,
the taxable income is estimated to be $8,700 per limited partner unit for the
year ending December 31, 1998. If the Partnership does not approve the Merger,
the taxable income is estimated to be $8,100 per limited partner unit for 1998.
The 1998 tax information, used for preparing your Federal and state income tax
returns, will be mailed no later than March 15, 1999. To ensure confidentiality,
we regret that we are unable to furnish your tax information over the telephone.
Unless otherwise instructed, we will mail your tax information to your address
as it appears on this report. Therefore, to avoid delays in delivery of this
important information, please notify the Partnership in writing of any address
changes by January 31, 1999.